Loh Chiak Eong & Anor v Lok Kok Beng & Ors

[2013] 1 MLJ (Mohd Hishamudin JCA) 27

A Loh Chiak Eong & Anor v Lok Kok Beng & Ors

COURT OF APPEAL (PUTRAJAYA) — CIVIL APPEAL NO P-02–2074

OF 2011
B
ABU SAMAH, MOHD HISHAMUDIN AND AZIAH ALI JJCA
16 OCTOBER 2012

C Contract — Building contract — Breach — Development project — Delay in

issuance of certificate of fitness for occupation — Whether purchasers may claim
damages for delay against architect

Professions — Architects — Negligence — Whether architects in development

D
project owe duty to purchasers to ensure that certificate of fitness for occupation
issued without delay

Tort — Negligence — Duty of care — Architects — Whether architects in

E development project owe duty to purchasers to ensure that certificate of fitness for
occupation issued without delay

Tort — Negligence — Professional negligence — Architects — Whether architects

F in development project owe duty to purchasers to ensure that certificate of fitness for
occupation issued without delay

Tort — Negligence — Pure economic loss — Whether claimable — Development

G project — Delay in issuance of certificate of fitness for occupation — Whether
purchasers may claim damages for delay against architect

The appellants were the architects of a project known as ‘Projek Skim

Bangunan Industri Ringan Bersepadu Pencemaran Bebas’ (‘the project’) which
H was developed by Merger Acceptance Sdn Bhd (‘the developer’). The
respondents were purchasers of the industrial buildings in the project and had
entered into a sale and purchase agreements (‘the SPA’) with the developer. The
original layout plan for the project was submitted by the appellants to the local
authority. The local authority in granting the planning approval for the project,
I imposed a condition that the requirements of the Department of Environment
(‘DOE’) must be complied with. The SPA also specifically contemplated
compliance with the statutory requirements of the Environmental Quality
(Sewage and Industrial Effluents) Regulations 1979, and for the construction
of a Central Effluent Industrial Treatment System (‘the CEITS’) for the
28 Malayan Law Journal [2013] 1 MLJ

treatment of hazardous and toxic waste that will be discharged by the industries A
in the project. The developer arranged for the CEITS to be designed by a
specialist and proceeded to construct the CEITS. However, the CEITS did not
function according to the satisfaction of the DOE, and as a consequence the
DOE refused to issue its certification of approval. Due to this, the appellants
refused to apply for the CFOs and subsequently resigned as the architects for B
the project. There was a delay of some 8 years before the purchasers could
lawfully occupy the industrial buildings. The respondents alleged that the delay
in the obtaining of the CFOs had caused them financial loss as they could not
move in into their industrial buildings and commence their business C
operations. The respondents alleged that this delay was due to the professional
negligence on the part of the appellants and hence made a claim against the
appellants. The plaintiffs claimed that the defendants owed them a duty of care
to ensure that the CFOs for the industrial units were obtained without undue
delay. The learned High Court judge found the appellants liable in negligence. D
The appellants appealed against that judgment.

Held, allowing the appeal with costs:

(1) While an architect may be made liable for faulty design or negligent E
supervision resulting in personal injury or inherent defects or damage to
property, there is no authority to support the contention made in the
present case that the appellants, as the architects, owed the respondents,
as purchasers of the industrial buildings, a duty of care to ensure that the
CFOs were obtained without undue delay (see para 45). F
(2) ‘Foreseeability of harm or damage’ is not the only test or factor in
determining the existence of a duty of care (see para 45).
(3) It would not be just and reasonable to impose a duty of care on the
architects to ensure that there is no undue delay on the part of the G
developer in obtaining the CFOs from the local authority. The
purchasers, had entered into a contractual relationship with the
developer. Therefore, should there be any undue delay in obtaining the
CFO, due to some carelessness or blunder or omission on the part of the
developer or its agents (the developer’s architects are the agents of the H
developer), the purchasers’ only remedy is to sue the developer for breach
of contract or for negligence, and not to sue the architects, who have no
contractual relationship with the purchasers, by attempting to invoke the
law of negligence (see para 60).
I
(4) The damage suffered by the plaintiffs was purely financial in nature. The
financial loss was not linked to any personal injury or structural defects or
damage to property. The weight of judicial opinion are against extending
the Donoghue v Stevenson principle to pure economic loss Kerajaan
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 29

A Malaysia lwn Cheah Foong Chiew dan lain-lain [1993] 2 MLJ 439
referred; Teh Khem On & Anor v Yeoh & Wu Development Sdn Bhd [1995]
2 MLJ 663 referred (see para 61).
(5) The findings of the High Court judge that the defendants were
responsible for the delay in obtaining the CFOs were against the weight
B
of the evidence (see para 64).

[Bahasa Malaysia summary

Perayu-perayu adalah arkitek-arkitek projek yang dikenali sebagai ‘Projek Skim
C Bangunan Industri Ringan Bersepadu Pencemaran Bebas’ (‘projek’) yang mana
dimajukan oleh Merger Acceptance Sdn Bhd (‘pemaju’).
Responden-responden adalah pembeli-pembeli bangunan kilang dalam projek
tersebut dan telah memasuki perjanjian jual dan beli (‘SPA’) dengan pemaju.
Pelan susun asal untuk projek tersebut dimasukkan oleh perayu-perayu kepada
D pihak berkuasa tempatan. Pihak berkuasa tempatan dalam memberi kelulusan
perancangan untuk projek tersebut, mengenakan syarat bahawa keperluan
Jabatan Alam Sekitar (‘JAS’) mesti dipenuhi. SPA tersebut juga secara khusus
memberi perhatian penuh mematuhi keperluan statutori Peraturan-Peraturan
Kualiti Alam Sekitar (Pembuangan Efluen dan Perindustrian) 1979, dan untuk
E pembinaan Pusat Sistem Rawatan Efluen Perindustrian (‘CEITS’) untuk
rawatan sisa berbahaya dan toksik yang akan dibuang oleh kilang-kilang dalam
projek tersebut. Pemaju mengatur supaya CEITS akan direka oleh pakar dan
meneruskan membina CEITS tersebut. Walau bagaimanapun, CEITS tidak
berfungsi mengikut kepuasan JAS, dan akibatnya JAS menolak untuk
F mengeluarkan sijil kelulusannya. Akibat ini, perayu-perayu menolak daripada
memohon untuk sijil layak menduduki (‘CFO’) dan kemudian meletak
jawatan sebagai arkitek untuk projek tersebut. Terdapat kelewatan selama
lapan tahun sebelum pembeli-pembeli boleh secara sah menduduki
bangunan-bangunan kilang tersebut. Responden-responden mendakwa
G bahawa kelewatan dalam memperolehi CFO telah menyebabkan kerugian
kewangan kepada mereka kerana mereka tidak dapat pindah masuk ke
bangunan-bangunan kilang mereka dan memulakan operasi perniagaan
mereka. Responden-responden mendakwa bahawa kelewatan ini adalah akibat
kecuaian profesional oleh pihak perayu-perayu dan maka membuat tuntutan
H terhadap perayu-perayu. Plaintif-plaintif mendakwa bahawa
defendan-defendan menanggung kewajipan berhati-hati terhadap mereka
untuk memastikan bahawa CFO untuk unit-unit kilang diperolehi tanpa
kelewatan tak wajar. Hakim Mahkamah Tinggi mendapati perayu-perayu
bertanggungjawab dalam kecuaian. Perayu-perayu merayu terhadap
I keputusan tersebut.

Diputuskan, membenarkan rayuan dengan kos:

(1) Sementara arkitek mungkin akan bertanggungjawab ke atas rekaan rosak
atau pengawasan cuai yang menyebabkan kecederaan diri atau kecacatan
30 Malayan Law Journal [2013] 1 MLJ

inherens atau kerosakan kepada hartanah, tidak terdapat autoriti untuk A

menyokong hujahan yang dibuat di dalam kes ini bahawa perayu-perayu,
sebagai arkitek-arkitek, bertanggungjawab kepada
responden-responden, sebagai pembeli-pembeli bangunan-bangunan
kilang, kewajipan berhati-hati untuk memastikan bahawa CFO
diperolehi tanpa kelewatan tak wajar (lihat perenggan 45). B
(2) ‘Foreseeability of harm or damage’ bukan satu-satunya ujian atau faktor
dalam menentukan kewujudan kewajipan berhati-hati (lihat perenggan
45).
(3) Ia tidak akan menjadi adil dan munasabah untuk mengenakan kewajipan C
berhati-hati ke atas arkitek-arkitek untuk memastikan bahawa tidak
terdapat kelewatan tak wajar oleh pihak pemaju di dalam memperolehi
CFO daripada pihak berkuasa tempatan. Pembeli-pembeli telah
memasuki hubungan kontrak dengan pemaju. Oleh itu, sekiranya
terdapat kelewatan tak wajar dalam memperolehi CFO tersebut, akibat D
kecuaian atau kesilapan atau ketinggalan oleh pihak pemaju atau ejennya
(arkitek-arkitek pemaju adalah ejen-ejen pemaju), satu-satunya remedi
pembeli-pembeli adalah untuk menyaman pemaju atas kemungkiran
kontrak atau kecuaian, dan bukan untuk menyaman arkitek-arkitek,
yang tidak mempunyai hubungan kontrak dengan pembeli-pembeli, E
dengan mencuba untuk membangkitkan undang-undang kecuaian
(lihat perenggan 60).
(4) Kerugian yang dialami oleh plaintif-plaintif adalah bersifat kewangan
semata-mata. Kerugian kewangan tidak berkait kepada apa-apa
F
kecederaan diri atau kecacatan struktur atau kerosakan kepada hartanah.
Kekukuhan pendapat kehakiman adalah menentang daripada
menggunakan prinsip Donoghue v Stevenson kepada kerugian ekonomi
tulen Kerajaan Malaysia lwn Cheah Foong Chiew dan lain-lain [1993] 2
MLJ 439 dirujuk; Teh Khem On & Anor v Yeoh & Wu Development Sdn
G
Bhd [1995] 2 MLJ 663 dirujuk (lihat perenggan 61).
(5) Dapatan hakim Mahkamah Tinggi bahawa defendan-defendan
bertanggungjawab untuk kelewatan memperolehi CFO adalah
menentang kekukuhan keterangan (lihat perenggan 64).]
H
Notes
For a case on pure economic loss, see 12 Mallal’s Digest (4th Ed, 2011 Reissue)
para 1431.
For cases on breach, see 3(2) Mallal’s Digest (4th Ed, 2011 Reissue) paras
3276–3303. I
For cases on duty of care, see 12 Mallal’s Digest (4th Ed, 2011 Reissue) paras
1157–1226.
For cases on negligence, see 10 Mallal’s Digest (4th Ed, 2011 Reissue) paras
1735–1736.
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 31

A For cases on professional negligence, see 12 Mallal’s Digest (4th Ed, 2011
Reissue) paras 1348–1428.

Cases referred to
Anns v Merton London Borough Council [1978] AC 728, HL (refd)
B Barret v Enfield London Borough Council [2001] 2 AC 550, HL (refd)
Bryan v Maloney (1995) 128 ALR 163, HC (refd)
Caparo Industries plc v Dickman [1990] 2 AC 605, HL (refd)
D & F Estates Ltd v Church Commissioners for England [1989] AC 177, HL
(refd)
C
Donoghue v Stevenson [1932] AC 562, HL (refd)
Dr Abdul Hamid Abdul Rashid & Anor v Jurusan Malaysia Consultants (sued as
a firm) & Ors [1997] 3 MLJ 546, HC (refd)
Dutton v Bognor Regis Urban District Council [1972] 1 QB 373, CA (refd)
D Governors of the Peabody Donation Fund v Sir Lindsay Parkinson & Co Ltd
[1985] AC 210, HL (refd)
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, HL (refd)
Invercargill City Council v Hamlin [1994] 3 NZLR 513, CA (refd)
Junior Books Ltd v Veitchi Co Ltd [1983] 1 AC 520, HL (refd)
E Kerajaan Malaysia lwn Cheah Foong Chiew dan lain-lain [1993] 2 MLJ 439,
HC (refd)
Majlis Perbandaran Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2
MLJ 389; [2006] 2 CLJ 1, FC (refd)
Man B&W Diesel S E Asia Pte Ltd and another v PT Bumi International Tankers
F and another appeal [2004] 2 SLR 300, CA (refd)
Murphy v Brentwood District Council [1991] 1 AC 398, HL (refd)
RSP Architects Planners & Engineers v Ocean Front Pte Ltd and another appeal
[1996] 1 SLR 113, CA (refd)
G
Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988] QB 758,
CA (refd)
Smith v Eric S Bush [1990] 1 AC 831, HL (refd)
Steven Phoa Cheng Loon & Ors v Highland Properties Sdn Bhd & Ors [2000] 4
MLJ 200; [2000] 4 CLJ 508, HC (refd)
H Sutherland Shire Council v Heyman (1984-1985) 157 CLR 424; (1985) 60
ALR 1, HC (refd)
Teh Khem On & Anor v Yeoh & Wu Development Sdn Bhd & Ors [1995] 2 MLJ
663, HC (refd)
Winnipeg Condominium Corporation No 36 v Bird Construction Co (1995) 121
I DLR (4th) 193, SC (refd)
Yuen Kun Yei v Attorney-General of Hong Kong [1988] AC 175, PC (refd)
Legislation referred to
Companies Act 1965 ss 218, 226(3)
32 Malayan Law Journal [2013] 1 MLJ

Appeal from: Writ of Summons No 22–130 of 2003 (High Court, Pulau A

Pinang)

Kenny Chan Kean Li (Yap Kok Kheong and Ong Bee Khoon with him) (Gibb &
Co) for the appellants.
Siau Suen Miin (Loo Yook Khin with him) (Siau Suen Miin &Tan) for the B
respondents.

Mohd Hishamudin JCA (delivering judgment of the court):

C

INTRODUCTION

[1] This is an appeal against the decision of the High Court of Penang given D
on 27 July 2011.

[2] On 5 January 2012 we, unanimously, allowed the appeal with costs.
E
[3] We now give the grounds of our decision.

THE FACTS OF THE CASE

F
[4] The appellants are architects by profession, and are partners in an
architectural firm called ‘Loh & Loh Architects’. They are sued by the
respondents for professional negligence in the carrying out of their duties as the
architects of a project known as ‘Projek Skim Bangunan Industri Ringan
Bersepadu Pencemaran Bebas’ at Taman Perindustrian Machang Indah (‘the G
project’) — a development project undertaken by a company called Merger
Acceptance Sdn Bhd (‘the developer’).

[5] The respondents are purchasers of industrial buildings or units

constructed by the developer in the project. The respondents, as purchasers, H
each, individually, had entered into a sale and purchase agreement (‘the SPA’)
with the developer.

[6] The developer, Merger Acceptance, had, by an agreement called ‘Project I

Management Agreement’, appointed the first defendant (Rakyat Corporation
Sdn Bhd) to be the project manager of the project.

[7] Merger Acceptance, the developer, is not a party in the action.

 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 33

A [8] Rakyat Corporation Sdn Bhd, whilst a party to the action before the
High Court, being cited as the first defendant, however, is not a party to this
appeal.

[9] In the present case, the original layout plan for the project was submitted
B by the appellants, as the architects of the project, to the local authority, Majlis
Perbandaran Seberang Perai (‘MPSP’). It was prepared on the instruction of the
developer and the project manager (the first defendant). It was subsequently
submitted to MPSP on the instruction of the developer. MPSP approved the
original layout plan on 20 December 1994. However, in reality, the road and
C drainage works were carried out not in accordance with the approved original
layout plan. Instead, they were carried out in accordance with the project
engineer’s plan (exh D2A) prepared by the project engineer and approved by
MPSP. But this was done not due to any oversight but on purpose: out of
necessity, as the original layout plan was prepared and submitted on the
D understanding that the developer would obtain the consents of all the
neighbouring landowners that there would be some degree of encroachment
into their lands (in the form of some slope cutting on their lands); but it turned
out that one of the owners of the neighbouring lots (Lot 495) had refused to
give consent. As a result of the refusal of the owner of Lot 495 to give consent
E to the cutting of the slopes on his land, on the advice of the project engineer
(the party responsible for the design of the plan and supervision of works in the
project pertaining to roads, drainage and earthworks), the original layout plan
had to be amended to reflect the true road and drainage works that were carried
out. The amended layout plan was submitted on 7 August 1997 and approved
F by MPSP on 5 August 1999.

[10] Now, going back to the SPA, cl 7.03 of the SPA provides:

Section 7.03 Vendor to procure the issue of certificate of fitness for occupation.
G
The Vendor shall do all acts and things necessary to obtain the Certificate of Fitness
for Occupation from the Appropriate Authorities in respect of the Industrial
Building and shall at its own cost and expense comply with all the requirements of
the Appropriate Authorities.
H
[11] The local authority, MPSP, in granting the planning approval for the
project, imposed a condition that the requirements of the Department of
Environment (‘DOE’), in particular, the provisions of the Environmental
Quality (Discharge and Industrial Effluents) Regulations 1979 must be
I complied with.

[12] Clause 14.02 and the sixth schedule of the SPA specifically contemplate
compliance with the statutory requirements of the Environmental Quality
(Discharge and Industrial Effluents) Regulations 1979, and for the
34 Malayan Law Journal [2013] 1 MLJ

construction of a Central Effluent Industrial Treatment System (‘the CEITS’) A

for the treatment of hazardous and toxic waste that will be discharged by the
industries in the project.

[13] Clause 14.02 of the SPA provides:

B
Section 14.02 TOXIC WASTEWATER TREATMENT

(a) The vendor agrees to supply the relevant toxic wastewater treatment plant
if so required by the purchaser and the vendor shall use its best endeavours
to supply same which shall comply with the relevant existing requirements C
of the Department of Environment BUT ALWAYS SUBJECT to the
preconditions that there is full disclosure of all the chemicals used or to be
used by the purchaser together with all other information and details to be
submitted in the format as set out in the Sixth Schedule herein.
(b) The purchaser hereby agrees to be solely and wholly responsible and liable D
for any failure or shortcomings or problems whatsoever in the treatment
of the wastewater as a result of inaccurate or insufficient information and
details provided by the purchaser to the vendor. In such an event, the
vendor shall not be liable to any party in any way whatsoever and the
purchaser shall not make any claims or take any action against the vendor
E
in respect of same.
(c) The purchaser further agrees and undertakes to utilize the relevant toxic
wastewater treatment plant for discharge of wastewater and chemicals in
the manner following all the prescribed conditions set by the vendor
failing which the vendor cannot be held liable for anything whatsoever. F

[14] The sixth schedule to the SPA provides:

SIXTH SCHEDULE
G
In order to facilitate the effective treatment of wastewater in compliance with the
requirement of the Department of Environment, the purchaser shall hereby provide
true and accurate information in respect of the items specified hereafter:
(a) Nature of Industry.
H
(b) Type of wastewater generated and the polluting agents it contained.
(c) Volume of wastewater discharged/generated from your manufacturing
process per hour.
(d) Concentration of polluting agents (in detail).
I
(e) Wastewater sources from manufacturing process.

[15] The plaintiffs, as the purchasers, had full knowledge that the
construction of the CEITS was an integral part of the project.
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 35

A [16] Pursuant to an application made by the developer to the DOE, the

latter, by its approval letter of 12 August 1997, made it a mandatory
requirement that a CEITS:
(a) be designed by a specialist licensed by the DOE;
B (b) be built according to prescribed specifications; and
(c) be functioning and operational to the satisfaction of the DOE before the
application for the issuance of the Certificate of Fitness for Occupation
(CFO) for the project can be made, to ensure that hazardous effluents
C would not be discharged into the environment.

[17] Accordingly, the developer arranged for the CEITS of the project to be
designed by a specialist licensed by the DOE; and, thereafter, the developer
proceeded to construct the CEITS. However, the CEITS that was constructed
D
by the developer did not function according to the satisfaction of the DOE,
and as a consequence the DOE refused to issue its certification of approval.

[18] By reason of the absence of the certification of approval by the DOE,

E the appellants, as the architects of the project, refused to apply for the CFOs
notwithstanding the instruction of the developer for them to do so.

[19] Subsequently, the appellants, by reason of their refusal to follow the

instruction, resigned as the architects for the project on 13 June 2005. At the
F time of their resignation, the developer has yet to obtain the CFOs from the
local authority.

[20] As a consequence, there was a delay in the application for the CFOs.
G The CFOs for the industrial buildings were issued only on 4 July 2005.
Therefore there was a delay of some eight years before the purchasers could
lawfully occupy the industrial buildings. The respondents alleged that this
delay in the obtaining of the CFOs had caused them financial loss as they could
not move in into the industrial buildings that they had purchased and to
H commence their business operations.

[21] The respondents allege that this delay was due to the professional
negligence on the part of the appellants.

I [22] At the High Court the learned High Court judge made a peculiar
finding: he found the appellants liable in negligence, but, only to the extent of
50%. However, we will say more of this peculiarity later at the end of this
judgment. He ordered damages to be assessed. The learned High Court judge
made a finding that there was a breach of duty of care on the part of the
36 Malayan Law Journal [2013] 1 MLJ

appellants, as the architects of the project, by reason of: A

(a) being negligent in the preparation of the original layout plan such that
the original layout plan had to be amended; and
(b) the refusal on the part of the appellants, as the architects of the project, to
apply for the CFOs. B

[23] According to the learned judge, the combined effect of facts (a) and (b)
above resulted in a substantial delay in the obtaining of the CFOs for the
industrial buildings purchased by the plaintiffs. C

[24] The appellants appealed to this court.

[25] At the trial of the action at the High Court of Penang, the appellants
were the second and third defendants (therefore, in this judgment, the D
appellants will be referred to as the ‘defendants’); whilst the company, Rakyat
Corporation Sdn Bhd (which we have mentioned earlier) was the first
defendant.

[26] Before the trial could commence, the first defendant (Rakyat E
Corporation Sdn Bhd) was wound up pursuant to s 218 of the Companies Act
1965 by the Kuala Lumpur High Court (Commercial Division) via a winding
up petition presented by a company called Kumpulan GMC Enterprise Sdn
Bhd. But the plaintiffs obtained leave of the winding up court on 13 April 2010
pursuant to s 226(3) of the Companies Act to pursue the present action against F
the first defendant.

[27] The first defendant and their counsel, however, were absent at the trial.
They did not participate in the trial at all.
G

[28] At the trial before the High Court, the respondents were the plaintiffs
(therefore, in this judgment, the respondents will be referred to as the
‘plaintiffs’).
H
[29] At the outset it is to be observed that the plaintiffs are not alleging any
faulty design of the industrial buildings (that they purchased from the
developer) or negligent supervision on the part of the defendants, as the
architects of the project, resulting in personal injury to the plaintiffs or
structural defects or damage to the industrial buildings purchased by the I
plaintiffs.

[30] The complaints of the plaintiffs are in regard to the performance of the
defendants, as architects, in the carrying out of their duties as the architects for
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 37

A the project, resulting in a long delay in the obtaining of the CFOs; and as a
consequence the plaintiffs suffered financial loss.

THE CRUCIAL ISSUE: IS THERE A DUTY OF CARE OWED BY THE

DEFENDANTS TO THE PLAINTIFFS
B

[31] The essence of the plaintiffs’ claim is that the defendants owe them a
duty of care to ensure that the CFOs for the industrial units purchased are
obtained without undue delay.
C
[32] Thus, in our view, the crucial issue is this: as a matter of law, is there a
duty of care owed by the defendants, as the architects of the project, to the
plaintiffs, as purchasers, to ensure that the developer obtained the CFOs as
stipulated under cl 7.03 of the SPA without undue delay.
D
[33] The present case concerns an important issue pertaining to judicial
policy in the context of the law of negligence. With respect, this important
judicial policy issue, unfortunately, was not properly addressed to by the
E
learned High Court judge in his grounds of judgment. This is most
unfortunate as the present case concerns an extremely difficult area of law.

[34] The difficulty encountered by the courts (not only in this country but in
other common law jurisdictions as well) in making any new pronouncement
F when confronted with a new factual situation is well stated by Lord Roskill in
Caparo Industries plc v Dickman [1990] 2 AC 605 (at p 628):

I agree with your Lordships that it has now to be accepted that there is no simple
formula or touchstone to which recourse can be had in order to provide in every case
G a ready answer to the question, given certain facts, the law will or will not impose
liability for negligence or in cases where such liability can be shown to exist,
determine the extent of that liability.

[35] Be that as it may, it is the submission of learned counsel for the

H
defendants that (1) the delay in obtaining the CFOs was not due to any want
of care or diligence on the part of the defendants as the architects of the project;
and (2) in any event, the defendants as the architects of the project, owe no duty
of care to the plaintiffs (as purchasers of the industrial units) in relation to the
obtaining of the CFOs under the SPA. As learned counsel for the defendants
I
puts it in his written submission before us:

The Appellants submit that such a claim is a responsibility that has been assumed
contractually by the Developer rather than the Appellants in their capacity as
Architects of the Project (particularly Section 7.01 of their respective SPA).
38 Malayan Law Journal [2013] 1 MLJ

The Appellants therefore submit that it would NOT be fair, just and reasonable to A
impose on the Appellants a duty of care for a responsibility which they had not
assumed more so when it pertains to a remedy which is already contractually
provided for.

[36] For the position that he takes, learned counsel for the defendants relies B
on the Singapore Court of Appeal’s decision in the case of Man B&W Diesel S
E Asia Pte Ltd and another v PT Bumi International Tankers and another appeal
[2004] 2 SLR 300. In this case, the Court of Appeal said (at p 318):
By entering into main contract with MSE in the term which we have set out, Bumi C
committed itself to looking to MSE for redress. While Bumi was anxious that the
sub-contractors, MBS or MBUK, should produce an engine in accordance with the
specifications, it did not intend to seek redress from MBS or MBUK. In so far as
Bumi was concerned, it had relied on MSE and MSE alone. It held MSE
responsible. Even in Junior Books, Lord Roskill accepted (at 547) that the concept of D
proximity must always involve, at least in most cases, some degree of reliance. In
such circumstances, we do not see how Bumi could have averred that it was relying
on the promise of MBS and MBUK to deliver a satisfactory engine. It was not. To
infer such a duty would run counter to the specific arrangement which Bumi had
chosen to make with MSE. While MBS and MBUK certainly owed a duty of care to
MSE by virtue of the sub-contract, we do not think a similar duty was owed to E
Bumi. There was no such assumption of duty by MBS or MBUK vis-a-vis Bumi.
Bumi could have, by altering the contractual structure, made MBS or MBUK
assume that responsibility. But it did not. Instead, Bumi elected to distance itself
from all the sub-contractors, including MBS and MBUK.
In this regard, we think the following passage, though obiter, of Lord Goff of F
Chieveley in Henderson v Merrett Syndicates Ltd [1994] 3 WLR 761 at 790, is
germane:
I wish however to add that I strongly suspect that the situation which arises in the
present case is most unusual; and that in many cases in which a contractual chain
G
comparable to that in the present case is constructed it may well prove to be
inconsistent with an assumption of responsibility which has the effect of, so to
speak, short circuiting the contractual structure so put in place by the parties. It
cannot therefore be inferred from the present case that other sub-agents will be
held directly liable to the agent’s principal in tort. Let me take the analogy of the
common case of an ordinary building contract, under which main contractors H
contract with the building owner for the construction of the relevant building,
and the main contractor sub-contracts with sub-contractors or suppliers (often
nominated by the building owner) for the performance of work or the supply of
materials in accordance with standards and subject to terms established in the
sub-contract. I put on one side cases in which the sub-contractor causes physical I
damage to assumption of responsibility by the sub-contractor to the building
owner; though the sub-contractor may be protected from liability by a
contractual exemption clause authorised by the building owner. But if the
sub-contracted work or materials do not in the result conform to the required
standard, it will not ordinarily be open to the building owner to sue the
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 39

A sub-contractor or supplier direct under the Hedley Byrne principle, claiming

damages from him on the basis that he has been negligent in relation to the
performance of his functions. For there is generally no assumption of
responsibility by the sub-contractor or supplier direct to the building owner, the
parties having so structured their relationship that it is inconsistent with any such
B assumption of responsibility. This was the conclusion of the Court of Appeal in
Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988] QB 758. As
Bingham LJ put it, at p 781:

I do not, however, see any basis on which (the nominated suppliers) could be
said to have assumed a direct responsibility for the quality of the goods to (the
C
building owners): such a responsibility is, I think, inconsistent with the
structure of the contract the parlies have chosen to make.

It is not for the court to help a party, after the event, to improve his commercial
D bargain. Bumi does not deserve any help. Bumi had made its bargain and must live
with it. Taking the policy line advocated by Lord Denning MR in Dutton, it would
not be just and reasonable in all the circumstances here to impose the duty on MBS
or MBUK. There is every reason that the loss should fall on Bumi.

E [37] Although the facts of our case are different from the facts of the
above-quoted case, nevertheless, we find the above dicta to be of some guidance
for the purpose of the present case.

F [38] In our judgment, an important fact to note is that the present case is not
a case of alleged carelessness on the part of the architects/defendants in the
carrying out of their responsibilities as architects of the project resulting in
personal injury to the plaintiffs or structural defects in the industrial buildings
purchased by the plaintiffs or damage to the same.
G
[39] In the instant case, except for the High Court case of Steven Phoa Cheng
Loon & Ors v Highland Properties Sdn Bhd & Ors [2000] 4 MLJ 200; [2000] 4
CLJ 508 (but see now the Federal Court judgment of Majlis Perbandaran
Ampang Jaya v Steven Phoa Cheng Loon & Ors [2006] 2 MLJ 389; [2006] 2 CLJ
H 1), no other judicial authority was cited by the plaintiffs for their proposition
that the defendants as the architects of the project owe a duty of care to the
purchasers to ensure that the CFOs of the buildings were obtained without
undue delay by the developer.

I [40] With respect, we observe that the plaintiffs, in relying on the judgment
of James Foong J (as he then was) in Steven Phoa, had failed to appreciate that
that case is totally irrelevant for the purpose of the present case, as the claims in
that case involved faulty design and negligent supervision on the part of the
architects resulting in death and injury to persons and damage to property.
40 Malayan Law Journal [2013] 1 MLJ

[41] At the outset it must be appreciated that in the present case the A
defendants, as the architects of the project, are not the agents of the plaintiffs,
the purchasers. They are the agents of their employer — the developer (Merger
Acceptance). In Building Contracts by Donald Keating (4th Ed), the learned
author states (at p 200):
B
The architect is engaged by the employer to act as his agent for the purpose of
securing the completion of the works in an economical and efficient manner. He
must perform these duties properly and if he fails to do so may be liable to the
employer in damages. But in performing them he must act fairly and professionally
in applying the terms of the building contract. Until recently it was thought that this
gave rise to a ‘dual capacity’ as agent and as quasi-arbitrator. It has now been settled C
by the House of Lords that an architect acting under the ordinary building contract
is the employer’s agent throughout notwithstanding that in the administration of
the contract he has to act in a fair and professional manner (Sutcliffe v Thackrah
[1974] AC 727).
D
[42] In our judgment, in determining whether a duty of care exists, and the
scope of such duty, all relevant circumstances would have to be examined. This
approach was enunciated by Gibbs CJ in Shire of Sutherland v Heyman
(1984–1985) 157 CLR 424 (at p 441): E
In deciding whether the necessary relationship exists, and the scope of the duty
which it creates, it is necessary for the court to examine closely all the circumstances
that throw light on the nature of the relationship between the parties.

F
[43] The above proposition was cited with approval by the Singapore Court
of Appeal in Man B&W Diesel (see para 31 of the judgment at p 312).

THE FINDING OF THE HIGH COURT JUDGE

G
[44] Now, in the present case, the learned High Court judge, on the issue of
liability in negligence, made a finding of mixed law and fact as follows:
In my considered opinion the long delay in completing the project was caused or
contributed by the second and third defendant as: H
(a) all the amendments (due to negligence of the defendants) took time and
they affected the completion of phase 1 of the project;
(b) the completion of phase 1 of the project was delayed and the CF was only
issued on 4 July 2005 because of the time taken for the approval of many
amended plans and also the rectification works on works not done I
according to the original plans;
(c) the amendments and rectification works might not affect the plaintiffs’
individual units, but they affected and caused the unreasonable delay in
the completion of phase 1 of the project; and
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 41

A (d) SD3, under cross-examination also admitted that, the architect had to
amend the plans, otherwise certificate of fitness could not be obtained.
The second and third defendants ought to know that when the approved plan of the
authority was not complied with, amendments to this plan had to be made and that
would undoubtedly delay the completion of the work in time for the CF to be issued
B and the delivery of vacant possession to be handed to the purchasers because
approval for the amended plan would take a long time.
Had the second and third defendants exercised their duty of care with diligence and
competence, they would have detected or avoided or stopped the non-compliance
of the contractors or engineers in the construction of the road and drainage that was
C not according to the original approved layout plan.
From the evidence in this case, I find that the delay which resulted in the late delivery
of vacant possession of eight years was attributed by the improper inspection and/or
supervision or omission of the work at the site, to be a breach of the duty of care
owed to the plaintiffs to have their unit of the industrial building purchased by them
D conveyed in time to hand over vacant possession with CF for their use.
…

Conclusion

E In the upshot, I agree with learned counsel for the plaintiff that the second and third
defendants’ conducts, actions, inactions or omission clearly fell short of standard
imposed by the law on a professional architect.
With that, I allow the plaintiffs’ claim. The second and third defendants are 50%
liable for the negligence.
F
THE FINDING OF THIS COURT

[45] With respect, we disagree with the above finding. In our judgment,
while we agree that an architect may be made liable for faulty design or
G negligent supervision resulting in personal injury or inherent defects or damage
to property, yet we know of no authority to support the contention made in the
present case that the defendants, as the architects, owe the plaintiffs, as
purchasers of the industrial buildings, a duty of care to ensure that the CFOs
are obtained without undue delay. We are, however, prepared to accept the
H plaintiffs’ contention that the defendants, as the architects of the project,
would be able to foresee that the various acts or omissions complained off,
assuming for the moment that the allegations to some extent are true, would
result in a delay in the obtaining the CFOs and consequential financial loss to
the plaintiffs. But ‘foreseeability of harm or damage’ is not the only test or
I factor in determining the existence of a duty of care. In other words, as a matter
of law, foreseeability of injury or damage does not automatically lead to a duty
of care (see Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988]
QB 758; and Man B&W Diesel). As a matter of law, there are other
considerations to be taken into account as well.
42 Malayan Law Journal [2013] 1 MLJ

[46] It hardly needs stressing here that we are mindful of the fact that we have A
to tread carefully before extending the principle in Donoghue v Stevenson
[1932] AC 562 to the facts of our case. For, any extension of the principle to a
new situation may have far-reaching consequences. The case law authorities of
the various common law countries have shown that extending the principle in
Donoghue v Stevenson to any new situation is fraught with legal difficulties. The B
cases also show that any extension of the principle to a new scenario ultimately
and inevitably involves an element of judicial policy. In Dutton v Bognor Regis
Urban District Council [1972] 1 QB 373 Lord Denning said (at p 397):

In Rondel v Worsley [1969] 1 AC 191, we thought that if advocates were liable to be C

sued for negligence they would be hampered in carrying out their duties. In Dorset
Yacht Co Ltd v Home Office [1970] AC 1004, we thought that the home office ought
to pay for damage done by escaping Borstal boys, if the staff was negligent, but we
confined it to damage done in the immediate vicinity. In SCM (United Kingdom)
Ltd v W J Whittall [1971] 1 QB 337, some of us thought that economic loss ought D
not to be put on one pair of shoulders, but spread among the sufferers. In
Launchbury v Morgans [1971] 2 QB 245, we thought that as the owner of the family
car was insured she should bear the loss. In short, we look at the relationship of the
parties; and then say, as a matter of policy, on whom the loss should fall.
E
[47] Then we have the House of Lords case of Anns v Merton London Borough
Council [1978] AC 728 (HL(E)). It concerned a block of flats that had been
constructed on ground that was subject to subsidence. The subsidence
ultimately resulted in damage to the flats and those tenants who held long
leases brought proceedings against the defendant local authority (and others) F
for negligently failing to inspect the foundations of the premises before
approving the building works on the basis if plans that were submitted by the
builders. The crucial issue in this case was whether a duty of care was owed by
the local authority to the tenants. In this case there was no accident causing
damage in the form of injury to person or to other property. The tenants’ loss G
was purely financial or monetary: the impact of the subsidence on the value of
their property interest or, alternatively, the cost of repairs.

[48] In determining whether a duty of care existed, Lord Wilberforce

H
advocated a two-stage test, the two components being foreseeability and policy:

First one has to ask whether, as between the alleged wrongdoer and the person who
has suffered damage there is a sufficient relationship of proximity or neighbourhood
such that, in the reasonable contemplation of the former, carelessness on his part
may be likely to cause damage to the latter — in which case a prima facie duty of care I
arises. Secondly, if the first question is answered affirmatively, it is necessary to
consider whether there are any considerations which ought to negative, or to reduce
or limit the scope of the duty or the class of person to whom it is owed or the
damages to which a breach of it may give rise.
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 43

A [49] The policy considerations (the second stage of the test) might include
apprehension about the class of persons to whom a duty of care would be owed
(as, for example, in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC
465 (HL(E)) where concern was expressed about the number of persons who
might rely on the tortfeasor’s misrepresentation); or about the nature of the loss
B suffered (whether purely economic or otherwise); or, about whether a private
law duty of care should be recognised in a case where the parties’ relationship
was governed in the public sphere by statute. Lord Wilberforce and the other
members of the panel of the House of Lords, ultimately, concluded that the
local authority owed a duty of care to the tenants.
C
[50] This is, indeed, a bold attempt by Lord Wilberforce’s to refine the
neighbour principle to enable it to be universally applied to ever new and more
far-reaching factual contexts. The two-stage test as advocated was applied by
Lord Roskill subsequently in the House of Lords decision in Junior Books Ltd v
D Veitchi Co Ltd [1983] 1 AC 520.

[51] However, in 1985 the High Court of Australia declined to apply Lord
Wilberforce’s two-stage test in Sutherland Shire Council v Heymann [1985] 60
ALR 1, at p 43. Brennan J criticised the possibilities for a ‘massive extension of
E a prima facie duty of care’ which Ann v Merton appeared to create. Instead,
Brennan J advocated for an incrementalist approach to novel categories of
negligence that were to be developed ‘by analogy with established categories’.
The learned judge said (at p 44):
F I am unable to accept that approach. It is preferable, in my view, that the law should
develop novel categories of negligence incrementally and by analogy with
established categories, rather than by massive extension of a prima facie duty of care
restrained only by indefinable ‘considerations which ought to negative, or to reduce
or limit the scope of the duty or the class of person to whom it is owed’.
G
[52] And three years later, in Yuen Kun Yei v Attorney-General of Hong Kong
[1988] AC 175 (PC), the Privy Council hearing an appeal from the Hong
Kong Court of Appeal ruled that the two-stage test in Anns v Merton should not
be regarded as in all circumstances a suitable guide in determining whether or
H not a duty of care was owed. In the words of the Privy Council (at p 194):
In view of the direction in which the law has since been developing, their Lordships
consider that for the future it should be recognised that the two-stage test in Anns v
Merton is not to be regarded as in all circumstances a suitable guide to the existence
I of a duty of care.

[53] Instead, according to the Privy Council, it was necessary to have regard
to whether a close and direct relationship between the parties existed and this
involved consideration of all the circumstances, including the reasonable
44 Malayan Law Journal [2013] 1 MLJ

contemplation of injury or damage being caused to the plaintiff by the A

defendant’s failure to exercise reasonable care and any consideration of public
policy that might negate the imposing of any duty of care.

[54] The above retreat from Lord Wilberforce’s approach in Anns v Merton
culminated in Murphy v Brentwood District Council [1991] AC 398 in which B
the House of Lords overruled Anns v Merton. This case concerned a local
authority’s approval of the plans for the construction of a house. The local
authority had relied on the advice of a consulting engineer which had not
properly taken into account miscalculations in the design of the foundations.
As a result of the defective foundations there was extensive damage to the walls C
and pipe work of the house. The plaintiff/owner of the property did not carry
out repairs, but sold the property at an undervaluation. The purchaser moved
into the house and did not carry out repairs. The plaintiff ’s claim was for pure
economic loss, the claim being the difference between the market value and the
value that the house fetched when sold. The House of Lords held that D
Donoghue v Stevenson applied to impose on the builder of a property a duty to
exercise reasonable care and skill to avoid injury or damage through defects in
its construction to those whom he might reasonably contemplate would be
affected by his acts or omissions. However, this duty only extended to latent
defects. Accordingly, where a defect was discovered before any injury to person E
or damage to property, other than the defective house itself, had occurred, the
loss suffered by the claimant was pure economic loss and, accordingly, was
irrecoverable because no duty of care was owed in respect of it. The House of
Lords also held that the local authority’s duties were regulated by public law
duties in the form of supervising compliance with building regulations and so F
forth. The extension of the local authority’s duties by the imposition, alongside
public regulation, of a private law duty of care was contrary to public policy and
should not be permitted; such extension was a matter for Parliament. Lord
Mackay of Clashfern, the Lord Chancellor, said (at p 457):
G
For this House in its judicial capacity to create a large new area of responsibility on
local authorities in respect of defective buildings would in my opinion not be a
proper exercise of judicial power.

[55] In Governors of the Peabody Donation Fund v Sir Lindsay Parkinson & Co H
Ltd [1985] AC 210 at p 241 Lord Keith of Kinkel expressed the judicial policy
element in determining the existence of a duty of care in the following terms:
So in determining whether or not a duty of care of particular scope was incumbent
upon a defendant it is material to take into consideration whether it is just and I
reasonable that it should be so.

[56] In the early 1990s, there were further attempts by judges of the House
of Lords to formulate a general principle by which to determine the existence
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 45

A of a duty of care. For instance, in Smith v Eric S Bush [1990] 1 AC 831 (HL(E))
Lord Griffiths enunciated a test based on (i) foreseeability; (ii) proximity; and
(iii) justice and reasonableness.

[57] In the House of Lords case of Caparo Industries plc v Dickman (a case
B that we have mentioned earlier) Lord Bridge of Harwich summarised the
principle on duty of care as follows:
What emerges is that, in addition to the foreseeability of damage, necessary
ingredients in any situation giving rise to a duty of care are that there should exist
C between the party owing the duty and the party to whom it is owed a relationship
characterised by the law as one of ‘proximity’ or ‘neighbourhood’ and that the
situation should be one in which the court considers it fair, just and reasonable and
that the law should impose a duty of a given scope upon the one party for the benefit
of the other.
D
[58] In the House of Lords case of Barret v Enfield London Borough Council
[2001] 2 AC 550 (HL(E)) Lord Browne-Wilkinson said:
In English law the decision as to whether it is fair, just and reasonable to impose a
E liability in negligence on a particular class would-be the defendants depends on
weighing in the balance the total detriment to the public interest in all cases from
holding such class liable in negligence as against the total loss to all would be the
plaintiffs if they are not to have a cause of action in respect of the loss they have
individually suffered.
F
[59] Now, having gone through the case law, let us revert to the facts of the
present case.

[60] In the present case, it is our judgment that, considering the facts of our
G case and the judicial authorities (none of which is on all fours with the facts of
the present case), it would not be just and reasonable to impose a duty of care
on the defendants/architects to ensure that there is no undue delay on the part
of the developer (Merger Acceptance) in obtaining the CFOs from the local
authority, MPSP. The plaintiffs, as purchasers, had entered into a contractual
H relationship with the developer, Merger Acceptance, and the latter is
contractually obliged under cl 7.03 of the SPA to ensure that the CFO is
obtained without undue delay. Therefore, should there be any undue delay in
obtaining the CFO, due to some carelessness or blunder or omission on the
part of the developer or its agents (the defendants, being the developer’s
I architects, are the agents of the developer), the plaintiffs’/purchasers’ only
remedy, in our view, is to sue the developer for breach of contract or for
negligence, and not to sue the defendants/architects, who have no contractual
relationship with the plaintiffs/purchasers, by attempting to invoke the law of
negligence. If the defendants/architects were careless or negligent in carrying
46 Malayan Law Journal [2013] 1 MLJ

out their duties resulting in a delay in the issuance of the CFO, it is to the A
developer that they should be answerable; and not to the plaintiffs/purchasers.
The defendants/architects were not appointed by the plaintiffs/purchasers; nor
were they agents of the plaintiffs/purchasers. The defendants/architects were
appointed by the developer, and they were the agents of the developer. They
certainly owe a duty of care to the developer, their employer, to ensure that B
there would be no undue delay in obtaining the CFOs. In our judgment, in the
light of the contractual arrangements of the parties, it would not be fair to
impose on the defendants a duty of care to the purchasers with regard to the
obtaining of the CFOs. In our view, on the facts of the present case and, in
particular, the contractual arrangements of the parties, it would be apt to adopt C
the following statement in the judgment of the Singapore Court of Appeal in
Man B&W Diesel (at p 321):
It is not for the court to help a party, after the event, to improve his commercial
bargain. D

[61] Moreover, in the present case, there is another pertinent legal

consideration: we find that the damage suffered by the plaintiffs is purely
financial in nature. The financial loss is not linked to any personal injury or
structural defects or damage to property. None of the plaintiffs complain of any E
personal injury or of any structural defects or damage to his industrial building
as a result of the lateness in obtaining the CFOs or as a result of the manner that
the defendants dealt with the CFO issue. We are, of course, mindful of the
High Court judgment in Dr Abdul Hamid Abdul Rashid & Anor v Jurusan
Malaysia Consultants (sued as a firm) & Ors [1997] 3 MLJ 546; but, F
nonetheless, we are of the view that the weight of judicial opinion are against
extending the Donoghue v Stevenson principle to pure economic loss (see D &
F Estates Ltd v Church Commissioners for England [1989] AC 177; Murphy v
Brentwood District Council [1991] 1 AC 398; Kerajaan Malaysia lwn Cheah
Foong Chiew dan lain-lain [1993] 2 MLJ 493; Teh Khem On & Anor v Yeoh & G
Wu Development Sdn Bhd [1995] 2 MLJ 663). In Murphy v Brentwood Lord
Keith of Kinkle said (at p 468):
The right to recover for pure economic loss, not flowing from physical injury, did
not then extend beyond the situation where the loss had been sustained through H
reliance on negligent mis-statements, as in Hedley Byrne.

[62] In this regard, we wish to associate ourselves with the observation made
by the Singapore Court of Appeal in Man B&W Diesel, that the cases in
England (for instance, Junior Books Co Ltd v Veitchi Ltd [1983] 1 AC 520), I
Australia (for example, Bryan v Maloney (1995) 128 ALR 163), New Zealand
(for example, Invercargill City Council v Hamlin [1994] 3 NZLR 512) and
Canada (for example, Winnipeg Condominium Corporation No 36 v Bird
Construction Co (1995) 121 DLR (4th) 193), often quoted in support of the
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 47

A argument that there could be a finding of duty of care even in cases of

supposedly ‘pure’ economic losses, upon a closer examination of the facts of
these cases, it will be noted that in these cases the losses were in a sense not
purely economic in nature; for in these cases the economic losses were suffered
on account of damage to homes. Nearer to home, even in the Singapore
B landmark case of RSP Architects Planners & Engineers v Ocean Front Pte Ltd
[1996] 1 SLR 113, where the Singapore Court of Appeal had allowed a claim
for ‘economic loss’ for the tort of negligence, there in that case it will be noted
that it was not a purely economic loss as the court, among others, took into
account the fact that the developers were negligent in their construction of the
C common property resulting in defects which the management corporation had
to make good.

[63] Our aforesaid finding that on the factual matrix of the case the
D defendants owe no duty of care to the plaintiffs is sufficient for us to dispose of
this appeal in favour of the appellants/defendants.

THERE IS NO BREACH OF DUTY OF CARE ANYWAY (ASSUMING

THERE IS A DUTY OF CARE OWED)
E
[64] However, for the sake of completeness we would just like to add the
following. In the instant case we find that the findings of the learned High
Court judge that the defendants were responsible for the delay in obtaining the
CFOs are against the weight of the evidence. We begin with the allegation of
F carelessness on the part of the defendants in preparing and submitting the
original layout plan to the local authority, MPSP. In this regard, we find that on
the evidence the plaintiffs are making a mountain out of molehill. It is to be
appreciated that even the evidence of the plaintiffs’ own witness, one Mr Ooi
Yeow Khoon (‘PW2’), the civil and structural engineer of the project, lends
G support to the defendants’ evidence and contention that it was not the fault of
the defendants that the original layout plan had to be amended. The
defendants, in preparing the original layout plan, had had to rely on the
expertise and inputs of the project engineer (PW2) that the layout plan
necessitated encroachment into the neighbouring lands; and that PW2, in
H giving his inputs, in turn had relied on the assurance of the developer that they
would be able to obtain the consent of all the owners of the neighbouring lots
affected by the layout plan; but then, as things turned out to be, one of the
owners of the neighbouring lands refused to give consent. When this particular
neighbour was adamant in not giving his consent, PW2 advised the developer,
I the first defendant (the project manager) and the defendants (the architects) to
amend the original layout plan; and the amended layout plan had to be
submitted to the local authority for approval. PW2’s evidence was supported
by the evidence of an independent witness, one Mr Chew Kam Soon (DW3 —
a former director of the developer, besides being a qualified engineer of 29 years
48 Malayan Law Journal [2013] 1 MLJ

experience). The learned High Court judge, in our opinion, with respect, had A
not given a proper evaluation of the evidence of the third defendant (architect
Loh Kee Beng — DW2) as well as the evidence of PW2 and DW3 in arriving
at his decision.

B
[65] On the evidence, the defendants also could not be faulted for refusing to
apply for the CFOs (and for discharging themselves as the architects of the
project) since the CEITS built by the developer on the advice of the specialist
consultant had failed to meet the requirement of the Environmental Quality
Act 1974 (‘the EQA’). It would have been a futile exercise, highly improper and C
inconsistent with the EQA for the defendants to apply for the CFOs when they
and the developer knew fully well that the DOE had not approved the CEITS
built by the developer. In this regard, the learned High Court judge had failed
to consider the evidence of Mr Muniandy (‘DW1’), the Chief Assistant
Director of the Department of Environment, who testified that providing the D
CIETS was a mandatory requirement imposed by his department on the
developer under the EQA as the purpose of the statutory law was to protect the
health of the occupiers of the industrial buildings as well as the environment;
and that the DOE would not support any application for CFO if this
mandatory requirement was not complied with. DW1 further said in evidence E
that it would be an offence under the EQA for the purchasers to begin
operation of their businesses on their premises (ie the industrial buildings that
they have purchased) in the absence of a CIETS approved by the DOE.

PECULIARITY OF HIGH COURT’S ORDER

F

[66] Finally it is disquieting for us to note from the notes of evidence, the
grounds of judgment of the learned High Court judge and the sealed order of
the High Court that the learned High Court judge only made a finding of
liability on the defendants (who are the second and third defendants before the G
High Court). No finding of liability (or otherwise) was made against the first
defendant who was absent and did not participate in the High Court
proceeding. Although there is the other defendant to the action, namely,
Rakyat Corporation, the first defendant, yet the notes of evidence, the grounds
of judgment of the learned judge and the sealed order of the High Court appear H
to have just ignored the existence of this other party. The notes of evidence, the
grounds of judgment and the sealed order of the High Court had merely
focused on the second and third defendants.

[67] To add to this puzzle, in his notes of evidence and grounds of judgment I
(and confirmed by the sealed order), the learned High Court judge, as we have
pointed out earlier, found the defendants (meaning the second and third
defendants) to be only ‘50% liable’, thus implying that the second and third
defendants are mere co-tortfeasors (there is no allegation or finding of
 Loh Chiak Eong & Anor v Lok Kok Beng & Ors
[2013] 1 MLJ (Mohd Hishamudin JCA) 49

A contributory negligence on the part of the plaintiffs). Yet the reason as to why
the liability against the second and third defendants has to be only ‘50%’ is,
remarkably, not explained in the grounds of judgment. The reason as to why
the second and third defendants are found to be mere co-tortfeasors is also,
curiously, not explained in the grounds of judgment. It is also not explained in
B the grounds of judgment that, if the second and third defendants are mere
co-tortfeasors, then who is/are the other tortfeasor/tortfeasors who is/are also
50% liable? Is it the developer (Merger Acceptance)? Or, is it the first defendant
(Rakyat Corporation)? Or, is there some other party? On this question, the
notes of evidence, the grounds of judgment and the sealed order, unfortunately,
C appear to be silent.

Appeal allowed with costs.

D Reported by Kanesh Sundrum